The Perpetual Wall of Market Worries

Here’s a nice chart from Fidelity Investments showing the perpetual struggles that the global economy and the equity markets have endured over the last 40 years.    It shows that economies will enter substantial periods of hardship, however, if the citizenry are moving in the right direction, they are likely to continue making progress.  After all, when taken to an extreme that is the story of man.  We innovate, overcome, survive.

Many readers might think of me as a pessimist because I tend to focus on the negatives.  As I’ve described before, butterflies and rainbows don’t ruin your day.  It would be easy to focus on the positives during the climb to the top of the investment mountain.  But it’s not the butterflies and rainbows that get in your way.  It’s the loose rocks.  And if you’re not keeping an eye out for them they’ll ruin more than your day.  In managing your downside risks you actually increase the odds of greater upside.

And while this isn’t an advertisement for “buy and hold” or similar approaches it is an advertisement for common sense and good risk management.  Common sense says that mankind will always wake up in the morning attempting to be better than he/she was yesterday.  Fighting this powerful trend through persistent pessimism might pay-off in the short-term, but it is guaranteed to lose in the long-term.  And a good risk manager knows there will be bumps along the way.  Plan accordingly.

Source: Fidelity

And along the path of global events, always beware of “the spider and the fly” reporting in modern day media… like maybe CNBC?

KILL ME NOW!

Is this thing tilted, left side downward? Then why Mr. Fidelity is 2000 higher than 2011?

Climbing the Wall of Worry? Logic has kept me from the mainstream markets and it took an understanding of the limits of the theory of modern portfolio/buy and hold from accepting the arguments against active management.

What should be explained is how the federal reserve helped cover the mistakes of the Fidelities, Bank of Americas etc. Helped them with a ladder to climb the wall. The question Fidelity should answer is how much in the coming years will the public sponsor Wall St. mistakes. Because if we get real capitalsim the wall can’t be climbed. It will crumble over on top of Wall St. But as long as we think it’s ok to keep the presses rolling for the states, sovereigns etc. the wall will become so large it can’t be climbed. The wall coming is big. Bigger than you MMT(which in my opinion is part of the problem).

can we put that up w/gold comparison (guess which has outperformed).

I am confused by this chart as well. S&P has been trading sideways in a range since 2000 while this chart shows that period as up, up and away, rising with greater seeming strength than the nineties. What exactly is it chart of?

The chart is of the EAFE is it not?

Says s&p 500 at the top but EAFE at the bottom.

Now if we could just get regulators to actually look at how mutual funds calculate report performance to their investors we might just get a full-blown riot on our hands.

Were finishing up a chart linning up 2000, 2007 and 2011. It’s quite fascinating. More Chart Porn. The numbers and dates are erie. 2011 would line up to a top around July of 1386-1406. Feb high to March low, March low July/August top etc. Jeremy Granthom may be early but by my teal leaf reading only by 2 months(maybe)

Is the S&P adjusted for inflation in that chart?

How can anyone say we are out of a recession with 9% official unemployment?

That’s just an embarassment to the definition.

I do agree with the major theme, however. Know the risks, but stay hopeful.

Although this is of course is propaganda from stock cheerleaders, I think its message is valuable – there’s always something to worry about. The trick is to decide what things are REALLY worth worrying about.

To me, the only real worry right now is those reliable valuation models (Hussman etc) that show stock returns in coming years will be poor. This is really all that matters – no need to try and guess what will cause the market to fall.

As Cullen says, manage risks – the opportunities will be quite obvious and the gains will take care of themselves

Perhaps it is an accumulation index which assumes reinvestment of dividends.

To compare with physical gold you would have to have an index which deducted storage and insurance costs (although for personal holdings those costs might not be endured so perhaps just straight investment price for investment quantity and quality. (otherwise the buy sell difference might be relevant if it is more than for stocks)

First of all, as a rule, never believe ANYTHING a mutual fund company tells you.

As an example, back in 1999, when I first started investing in mutual funds, my “advisor” told me that stocks always go up. She even showed me a pretty stock index chart to prove it. The chart timeline started somewhere around 1982, around the start of the biggest, longest bull market in history. However, she never showed me a chart from 1966 to 1982, say. Or 1929 to 1953/4 (the year stocks finally regained their 1929 highs. This is called ‘bias’, and fund company’s use it to maximum advantage.

Just look at the chart above, which, similarly to what I describe above, starts at around the 1974 low so that the chart has a very nice, very convincing long-term uptrend (except of course for the 2000- 2011 timeframe, which would be very conspicuous by its absence.

Note: the S&P is lower, not higher today than it was in 2000. In nominal terms. In term of the S&P priced in gold, it’s even worse. But once again, we have a fund company manipulating the info.

Furthermore, to claim that stocks can successfully climb a wall of worry by highlighting negative events in history along the chart line is specious, to say the least. It’s a meaningless correlation. It’s like saying, little Johnny grew from a little boy into a healthy young man despite the fact that when he was 5 he got the measles, when he was 13 he broke his arm, and when he was 16 he failed grade 12.

The real reason the long-term trend is up is because the money supply has grown to meet the needs of a growing economy, which in term reflects the growth of the population and its productivity.

I can’t believe I spend this much time on this bulls¶*t.

Your message of prudent risk management and paying attention to the downside is timely, important, and, unfortunately, underemphasized by money managers of all types. Keep preaching. Eventually, someone will listen.

The most important risk management rule for the retail investor: the return of your principal is more important than the return on your principal. Or, as Warren Buffet says: never lose money. Unfortunately for retail, we’re not too big to fail.

You need to go back a little more than 40 years to find something similar to what we are going through now. Try 1930, 1870, 1815….you know the depressions.

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Here’s a nice chart from Fidelity Investments showing the perpetual struggles that the global economy and the equity markets have endured over the last 40 years.    It shows that economies will enter substantial periods of hardship, however, if the citizenry are moving in the right direction, they are likely to continue making progress.  After all, when taken to an extreme that is the story of man.  We innovate, overcome, survive.

Many readers might think of me as a pessimist because I tend to focus on the negatives.  As I’ve described before, butterflies and rainbows don’t ruin your day.  It would be easy to focus on the positives during the climb to the top of the investment mountain.  But it’s not the butterflies and rainbows that get in your way.  It’s the loose rocks.  And if you’re not keeping an eye out for them they’ll ruin more than your day.  In managing your downside risks you actually increase the odds of greater upside.

And while this isn’t an advertisement for “buy and hold” or similar approaches it is an advertisement for common sense and good risk management.  Common sense says that mankind will always wake up in the morning attempting to be better than he/she was yesterday.  Fighting this powerful trend through persistent pessimism might pay-off in the short-term, but it is guaranteed to lose in the long-term.  And a good risk manager knows there will be bumps along the way.  Plan accordingly.

Source: Fidelity

And along the path of global events, always beware of “the spider and the fly” reporting in modern day media… like maybe CNBC?

KILL ME NOW!

Is this thing tilted, left side downward? Then why Mr. Fidelity is 2000 higher than 2011?

Climbing the Wall of Worry? Logic has kept me from the mainstream markets and it took an understanding of the limits of the theory of modern portfolio/buy and hold from accepting the arguments against active management.

What should be explained is how the federal reserve helped cover the mistakes of the Fidelities, Bank of Americas etc. Helped them with a ladder to climb the wall. The question Fidelity should answer is how much in the coming years will the public sponsor Wall St. mistakes. Because if we get real capitalsim the wall can’t be climbed. It will crumble over on top of Wall St. But as long as we think it’s ok to keep the presses rolling for the states, sovereigns etc. the wall will become so large it can’t be climbed. The wall coming is big. Bigger than you MMT(which in my opinion is part of the problem).

can we put that up w/gold comparison (guess which has outperformed).

I am confused by this chart as well. S&P has been trading sideways in a range since 2000 while this chart shows that period as up, up and away, rising with greater seeming strength than the nineties. What exactly is it chart of?

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